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This excerpt taken from the ELN 6-K filed Mar 31, 2008. Analysis
of Results of Operations by Segment
Biopharmaceuticals
Total
Revenue
For analysis of our product revenue and contract revenue by
segment, refer to pages 39 to 41 of the “Financial
Review.”
Cost
of Sales
Cost of sales increased 2% to $69.1 million in 2007 from
$67.6 million in 2006. Included within cost of sales were
other charges of $3.1 million (2006: $Nil), as described
below. Excluding other charges, the gross margin on revenue was
71% in 2007, as
44 Elan
Corporation, plc 2007 Annual Report
Table of Contents
Financial Review
compared to 73% in the same period 2006. The decrease in the
gross profit margin was principally due to the change in the mix
of product sales and reduced selling price of Maxipime as
a result of a generic competitor.
Selling,
General and Administrative Expenses
SG&A expense increased 47% to $553.2 million in 2007
from $377.0 million in 2006. Included within SG&A
expense were other charges of $289.0 million (2006:
$5.6 million other credits), as described below. Excluding
other charges, SG&A expense decreased 31% to
$264.2 million from $382.6 million in 2006. The
decrease primarily reflects lower net SG&A expenses
recorded in relation to Tysabri, as described on
page 41, and the restructuring of our commercial
infrastructure related to the approval of a generic form of
Maxipime in June 2007 and the anticipated approval of a
generic form of Azactam, along with reduced amortisation
expense following the impairment of our Maxipime and
Azactam intangible assets, which resulted in the
reduction of related selling and administrative costs.
Research
and Development Expenses
R&D expense increased 24% to $223.3 million in 2007
from $180.1 million in 2006. Included within R&D
expense was other charges of $10.2 million (2006:
$9.9 million), as described below. Excluding other charges,
R&D expense increased 25% to $213.1 million in 2007,
compared to $170.2 million in 2006. The increase was
primarily due to increased expenses associated with the
progression of our Alzheimer’s disease programmes and
particularly the advance of AAB-001 into Phase 3 clinical trials
and the advance of ELND005 into Phase 2 clinical trials during
2007. R&D expenses for 2007 included $39.3 million
(2006: $31.5 million) in relation to Tysabri.
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